SCOTTSDALE, Ariz., May 12, 2020 (GLOBE NEWSWIRE) -- AgJunction Inc. (TSX: AJX) ("AgJunction" or the "Company") is reporting financial results for the first quarter ended March 31, 2020. All currency amounts are expressed in U.S. dollars.
First Quarter 2020 Financial Summary vs. First Quarter 2019
- Revenue was $5.2 million versus $14.0 million (Q1 2019 included $8.7 million of revenue related to the bulk purchase order (BPO)).
- Gross margin increased significantly to 56.6% compared to 41.1%.
- Operating expenses declined to $3.6 million compared to $5.7 million.
- Net loss was $0.7 million or $(0.01) per share, versus net income of $0.1 million or nil per share.
- EBITDA was $0.5 million versus $0.6 million.
Management Commentary
“Our first quarter reflected momentum from the refined strategy we announced earlier this year,” said Dr. M. Brett McMickell, president and CEO of AgJunction. “As a reminder, our year-over-year comparisons don’t paint the whole picture as our first quarter of last year included a significant amount of revenue from a bulk purchase order that was completed in the third quarter of 2019. During the first quarter, sales in our indirect channel exceeded internal expectations as we are now better positioned to meet the specific needs of OEM and VAR partners with our flexible modules. Additionally, we experienced an uptick in demand for our direct-to-consumer Wheelman products that exceeded our internal expectations as interest in our unique offerings continue to increase through word-of-mouth and industry trade coverage.
“As we move forward in this ever-changing market environment (due to COVID-19), we continue to operate at full strength and have experienced limited disruptions as a result of the COVID-19 pandemic. However, we are diligently monitoring the situation, particularly in our global supply chain, and have contingency plans in place in an effort to mitigate risk. Despite these macro challenges, the ag industry seems to be recovering from a historically difficult 2019 and we do not currently see any factors that we believe will materially impact demand in 2020. In fact, we have generated a higher backlog of orders in our second quarter than we originally anticipated, and our team is doing an excellent job fulfilling the heightened demand.
“Although there is much uncertainty in the market, we remain confident in our refined strategy and continue to expect growing sales by providing technologically advanced modules that are among the most innovative in the industry. Given our strong cash balance and exceptional workforce, we believe we are well-positioned to weather challenges that may arise in this environment and look forward to continue meeting the evolving needs of our customers.”
First Quarter 2020 Financial Results
Total revenue in the first quarter of 2020 was $5.2 million compared to $14.0 million in the first quarter of 2019. Excluding $8.7 million of revenue generated from the BPO in the prior year period, revenue in the first quarter of 2020 was nearly flat compared to the first quarter of 2019.
Gross profit in the first quarter of 2020 was $2.9 million compared to $5.8 million in the first quarter of 2019. Gross margin increased significantly to 56.6% compared to 41.1% in the first quarter of 2019. The margin improvement was primarily driven by an increase in flexible module product mix sold, a reduced impact of the BPO sales, and lower manufacturing costs due to streamlining processes.
Total operating expenses in the first quarter of 2020 declined to $3.6 million compared to $5.7 million in the first quarter of 2019. The improvement was primarily driven by cost-savings from the reduction in staffing and closure of certain facilities as a result of the Company’s previously implemented consolidation strategy.
Net loss in the first quarter of 2020 was $0.7 million or $(0.01) per share, compared to net income of $0.1 million or nil per share in the first quarter of 2019. The decline was primarily driven by the aforementioned decrease in revenue related to the BPO.
EBITDA in the first quarter of 2020 was $0.5 million compared to $0.6 million in the first quarter of 2019.
Cash and cash equivalents at March 31, 2020, totaled $15.6 million compared to $17.2 million at the end of 2019. Working capital was $18.6 million compared to $19.2 million at the end of 2019. The Company continues to operate debt free and has access to an unutilized $3.0 million line of credit.
Conference Call
AgJunction will hold a conference call tomorrow at 11:00 a.m. Eastern time to discuss its first quarter 2020 results, followed by a question-and-answer session.
Date: Wednesday, May 13, 2020
Time: 11:00 a.m. Eastern time (8:00 a.m. Pacific time)
Toll-free dial-in number: 1-877-573-5992
International dial-in number: 1-270-215-9903
Conference ID: 7958447
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and via the investor center section of the company’s website at https://agjunction.com/.
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through May 27, 2020.
Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406
Replay ID: 7958447
About AgJunction
AgJunction Inc. is a global leader of advanced guidance and autosteering solutions for precision agriculture applications. Its technologies are critical components in over 30 of the world’s leading precision agriculture manufacturers and solution providers and it holds over 200 patents and patents pending. AgJunction markets its solutions under leading brand names including Novariant®, Wheelman®, Whirl™ and Handsfreefarm®. AgJunction is headquartered in Scottsdale, Arizona, and is listed on the Toronto Stock Exchange (TSX) under the symbol “AJX.” For more information, please go to AgJunction.com.
Non-IFRS Measures
This press release uses EBITDA, which is a financial measure that does not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS"). EBITDA is defined as net income before interest, income tax, depreciation and amortization. The Company believes that this non-IFRS measure provides useful information to both management and investors in measuring financial performance. As this measure, does not have a standard meaning prescribed by IFRS, it may not be comparable to similarly titled measures presented by other publicly traded companies, and should not be construed as an alternative to other financial measures determined in accordance with IFRS. This non-IFRS measure is provided as additional information to complement IFRS measures by providing further understanding of operations from management’s perspective. Accordingly, non-IFRS measures should never be considered in isolation nor as a substitute to using net income as a measure of profitability or as an alternative to the IFRS consolidated statements of income or other IFRS statements. See "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation" herein for additional information.
Forward-Looking Statements
This press release contains forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws and is based on the expectations, estimates and projections of management of AgJunction as of the date of this news release, unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to its current and future operations. These statements are only predictions and actual events or results may differ materially. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, performance or achievement since such expectations are inherently subject to significant business, economic, competitive and political uncertainties and contingencies as well as unanticipated force majeure events. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by the Company. In particular, forward-looking statements in this press release include, but are not limited to statements with respect to: the Company’s strategy, plans, objective sales, financial position and focus. Accordingly, readers should not place undue reliance on such forward-looking information contained in this press release.
In respect of the forward-looking information, AgJunction has provided such information in reliance on certain assumptions that it believes are reasonable at this time, including, but not limited to, the sufficiency of budgeted capital expenditures in carrying out planned activities; that AgJunction's future results of operations will be consistent with management expectations in relation thereto; product and market expansion; availability of key supplies, components, services, networks and developments; the impact of competition; conditions in general economic, agricultural autosteering and financial markets; uncertainty around the duration and scope of the COVID-19 pandemic and the impact of the pandemic and actions taken in response on global and regional economies and economic activity; demand for the Company's products; and the continuity of existing business relationships.
Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which AgJunction operates; competition; inability to successfully introduce new technology and new products in a timely manner; legal claims for the infringement of intellectual property and other claims; negative conditions in general economic, agricultural and financial markets; and reduced demand for the Company's products. Readers are cautioned that the foregoing list of factors is not exhaustive.
Additional information on other factors that could affect the Company's operations or financial results, are included in reports of AgJunction on file with applicable securities regulatory authorities, including but not limited to, AgJunction's Annual Information Form which may be accessed on its SEDAR profile at www.sedar.com. The forward-looking information contained in this press release is made as of the date hereof and AgJunction undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Contact:
Media
press@agjunction.com
Investor Relations
Gateway Investor Relations
Cody Slach, Managing Director
1-949-574-3860
AJX@gatewayir.com
| AgJunction Inc. | ||||||
| Consolidated Statements of Financial Position | ||||||
| (Expressed in U.S. thousand dollars) | ||||||
| March 31, | December 31, | |||||
| 2020 | 2019 | |||||
| (unaudited) | ||||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 15,648 | $ | 17,248 | ||
| Accounts receivable, net | 4,059 | 2,793 | ||||
| Current portion of notes receivable, net | 320 | 320 | ||||
| Inventories | 3,544 | 3,743 | ||||
| Prepaid expenses and deposits | 650 | 819 | ||||
| 24,221 | 24,923 | |||||
| Notes receivable, less current portion, net | 693 | 760 | ||||
| Property, plant and equipment, net | 1,447 | 1,535 | ||||
| Right-of-use assets | 930 | 1,020 | ||||
| Intangible assets, net | 10,042 | 10,112 | ||||
| Goodwill | 143 | 143 | ||||
| $ | 37,476 | $ | 38,493 | |||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued liabilities | $ | 3,433 | $ | 3,540 | ||
| Provisions | 916 | 826 | ||||
| Current portion of lease liability | 393 | 429 | ||||
| Current portion of deferred revenue | 887 | 935 | ||||
| 5,629 | 5,730 | |||||
| Deferred revenue, less current portion | 3,123 | 3,298 | ||||
| Lease liability, net of current portion | 612 | 702 | ||||
| Total liabilities | 9,364 | 9,730 | ||||
| Shareholders’ equity: | ||||||
| Share capital | 148,495 | 148,495 | ||||
| Equity reserve | 4,903 | 4,890 | ||||
| Accumulated deficit | (125,286 | ) | (124,622 | ) | ||
| 28,112 | 28,763 | |||||
| $ | 37,476 | $ | 38,493 | |||
| AgJunction Inc. | ||||||
| Consolidated Statements of Profit or Loss | ||||||
| Three months ended March 31, 2020 and 2019 | ||||||
| (Unaudited - expressed in U.S. thousand dollars) | ||||||
| Three months ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Revenue | $ | 5,201 | $ | 14,013 | ||
| Cost of sales | 2,258 | 8,250 | ||||
| Gross profit | 2,943 | 5,763 | ||||
| Expenses: | ||||||
| Research and development | 1,197 | 1,752 | ||||
| Sales and marketing | 840 | 1,357 | ||||
| General and administrative | 1,601 | 2,608 | ||||
| 3,638 | 5,716 | |||||
| Operating (loss) income | (695 | ) | 47 | |||
| Foreign exchange gain, net | 28 | (18 | ) | |||
| Interest and other income | (59 | ) | (60 | ) | ||
| Gain on sale of property, plant and equipment | - | 8 | ||||
| (31 | ) | (70 | ) | |||
| Net (loss) income before income tax | (664 | ) | 116 | |||
| Income tax benefit | - | 1 | ||||
| Net (loss) income | $ | (664 | ) | $ | 115 | |
| Earnings per share: | ||||||
| Basic and diluted (loss) per share | $ | (0.01 | ) | $ | - | |
| AgJunction Inc. | |||||||
| Consolidated Statements of Cash Flows | |||||||
| Three Months ended March 31, 2020 and 2019 | |||||||
| (Unaudited - expressed in U.S. thousand dollars) | |||||||
| 2020 | 2019 | ||||||
| Cash flows used in operating activities: | |||||||
| Net (loss) income | $ | (664 | ) | $ | 115 | ||
| Items not involving cash: | |||||||
| Depreciation | 819 | 263 | |||||
| Amortization | 440 | 297 | |||||
| Share-based payment transactions | 13 | 140 | |||||
| Allowance loss on trade receivables | 3 | - | |||||
| Recovery (write down) of reserve for slow moving and obsolete inventories | 7 | (304 | ) | ||||
| Loss on disposal of property, plant and equipment | - | 8 | |||||
| Change in non-cash operating working capital: | |||||||
| Accounts receivable | (1,267 | ) | 93 | ||||
| Inventories | 192 | 1,050 | |||||
| Prepaid expenses and deposits | 170 | (138 | ) | ||||
| Accounts payable and accrued liabilities | (110 | ) | (2,539 | ) | |||
| Provisions | 90 | 235 | |||||
| Contract liabilities | - | 173 | |||||
| Deferred revenue | (223 | ) | (99 | ) | |||
| Cash flows used in operating activities | (530 | ) | (705 | ) | |||
| Cash flows used in financing activities: | |||||||
| Interest payments on lease liabilities | (13 | ) | (14 | ) | |||
| Principal payments on lease liabilities | (113 | ) | (134 | ) | |||
| Cash flows used in financing activities | (126 | ) | (148 | ) | |||
| Cash flows used in investing activities: | |||||||
| Principal payments on notes receivable | 67 | 66 | |||||
| Purchase of property, plant and equipment | (641 | ) | (153 | ) | |||
| Intangible asset addition, net | (370 | ) | (396 | ) | |||
| Cash flows used in investing activities | (944 | ) | (483 | ) | |||
| Decrease in cash position | (1,600 | ) | (1,336 | ) | |||
| Cash and cash equivalents, beginning of period | 17,248 | 21,398 | |||||
| Cash and cash equivalents, end of period | $ | 15,648 | $ | 20,062 | |||
| AgJunction Inc. | ||||||
| Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation | ||||||
| Three months ended March 31, 2020 and 2019 | ||||||
| (unaudited - expressed in U.S. thousand dollars) | ||||||
| Three months ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Net income (loss) | $ | (664 | ) | $ | 115 | |
| Interest (income) | (59 | ) | (60 | ) | ||
| Income tax benefit, net | - | (1 | ) | |||
| Depreciation | 819 | 263 | ||||
| Amortization | 440 | 297 | ||||
| EBITDA | $ | 536 | $ | 614 | ||